Pizza toppings to be costlier than pizza! Toppings to attract 18% GST

KEY STORY

• In a major setback for pizza lovers, the Haryana appellate authority for advance ruling (AAAR) has ruled levying a higher GST on pizza toppings. The body said that since toppings are not pizza, hence, 18 per cent higher GST should be applied on them.

• In a March 10 ruling, the AAAR said the pizza topping should attract 18 per cent GST since its preparation method is different from that of a pizza. The body also took into account all the ingredients used in a topping, concluding that a pizza topping is sold as a “cheese topping” but it really is not cheese and so should be taxed more.

• Highlighting that a pizza topping contains “vegetable fat” as a substantial portion (about 22 per cent of the ingredients used), the AAAR stated that it does not qualify to be categorised as ‘processed cheese’ or a type of cheese.

  Pizza topping would merit classification as ‘food preparation’, it added.

• GST on pizzas

  At present, GST rates on pizzas differ on the basis of their preparation and selling process. To simplify, a pizza retailed and consumed within a restaurant attracts 5 per cent GST. Buying a pizza base alone attracts 12 per cent GST. On the other hand, 18 per cent GST would be levied on a pizza on home delivery.

• GST rates could be based on 3 tests – common parlance test, end use test or ingredients test according to tax experts. Moreover, they opined that often tax rates could differ depending on how a product is categorised.

  Cheese, when called “fat” is taxed at a lower rate.

• “The authorities have given weightage to the actual ingredients vis-a-vis common parlance, under which one would treat them as cheese toppings and classify them accordingly,” Economic Times quoted Harpreet Singh, partner, KPMG India as saying.

  “This reiterates the fact that classification under GST is a factor of various principles, viz. end use of product, key constituents, common parlance, etc., and hence a complex process,” he added.